Succession planning is quickly becoming one of the most significant areas of concern for many small business owners. Registered investment advisors (RIAs) face a unique challenge in this regard, as the industry is relatively new and many of today's practices are independent and first generation, with little-to-no experience or precedent in ownership transfer. Without an adequate succession plan in place, the RIAs' business equity and the security of his/her clients' portfolios are at risk.
Engaging independent advisors in a succession planning discussion is critical. Industry education on succession typically focuses on the mechanics (e.g., deal structures and multiples/valuation). What is missing, and what motivates behavior, is a business owner who can envision the end-state of his practice—the personal and professional goals and desires he or she wants to realize through succession.